Protesters vent anger at Parmalat hearing

With banner-toting protesters outside and so many lawyers inside they could not all fit in the court, the first legal proceedings in Italy to arise from the Parmalat scandal began yesterday in Milan.

Bank of America, the only bank so far facing possible indictment, immediately lodged a petition that could delay the hearing of the evidence against it. A lawyer for the bank said because of a technicality, none of the papers entered in evidence by the prosecutors since December 23 last year were valid.

The bank's counsel, Riccardo Olivo, said if his petition were accepted, the entire investigation into Bank of America since last December would have to be repeated.

It could also mean any trial of the bank would be separated from those of the other firms and individuals who have been charged.

In a statement, the bank said: "We are confident this procedure will result in a finding that the facts do not support the administrative charge against Bank of America."

Since the Parmalat bubble burst, it has emerged that the group had debts of more than €14bn (£9.6bn), camouflaged by a network of offshore subsidiaries. At stake in all the complex judicial proceedings around the case is the issue of whether international financial institutions knew of the risks involved in investing in Parmalat when they organised a string of bond issues that filled the gaps in the group's accounts.

The preliminary hearings, which began yesterday, are to decide which of the accused should be put in the dock on charges of market rigging, declaring false accounts and obstructing the work of the market regulator. Judge Cesare Tacconi began the process by fixing a fast-track trial to start in January for two former Grant Thornton accountants who audited Parmalat's books.

Another 27 people, including the stricken group's founder, Calisto Tanzi, face the possibility of indictment. Mr Tanzi was not in court yesterday.

Also at risk, in addition to Bank of America, are the Italian unit of accountant Deloitte Touche and the former Italian affiliate of Grant Thornton, which renamed itself Italaudit after being disowned by the parent organisation.

A separate investigation by prosecutors in Parma is expected to lead to further, and more serious, charges of fraudulent bankruptcy.

Some of the 135,000 investors who lost their savings when the value of bonds and shares plummeted demonstrated outside the courthouse before the start of the hearing with a banner proclaiming "Italy's shame". Some 60 lawyers presented themselves to the court, but many had to watch the deliberations on a screen in an adjoining room.

Italaudit, which lost so many clients after the Parmalat affair that it had to wind up its operations, announced yesterday it would seek to become a civil plaintiff instead of a defendant in the main trial. Parmalat itself, which is under emergency management, registered a case against the charged individuals but not the financial institutions.